Jailed ex-CA CEO Kumar implicates others in accounting cover-up

Former CA CEO Sanjay Kumar has made more allegations against board members over a high-profile accounting scandal.

Chris Kanaracus, IDG News Service
September 4, 2008

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Former CA CEO Sanjay Kumar, now serving a jail sentence following a high-profile accounting scandal at the software vendor, implicated a number of other current and former CA officials in an affidavit filed in U.S. District Court-New York Eastern District on Aug. 27.

At the heart of the scandal was an accounting practice at CA referred to as "the 35-day month," which saw the company's fiscal quarters begin and end about five days late, according to the affidavit. This enabled CA to prematurely record revenue in order to meet Wall Street analyst estimates.

According to Kumar's declaration, the practice was "firmly entrenched" at the company when he began working there in 1987, and that company co-founder and former CEO Charles Wang "personally directed the implementation of this practice in [his] presence."

He also alleges that board member and ex-US Senator Alfonse D'Amato, ex-board chairman Lewis Ranieri and co-founder Russell Artzt knew about the practice.

In addition, Kumar said he told a CA board investigating the scandal about Ranieri and D'Amato's awareness of the practice, and that they had "taken steps to protect Wang and conceal the facts."

Kumar made the statement in connection with a shareholder lawsuit over the accounting scandal, which saw the company eventually shell out $225 million into a shareholder restitution fund. CA also acknowledged misstating $2.2 billion in revenue over a period of years.

CA said in a statement Thursday that the company already completed an exhaustive investigation, and that "in a matter of this complexity, one cannot draw conclusions from the uncorroborated recollections of a single individual."

Artzt released a statement calling the allegations "completely false."

A spokesman for Wang told The Wall Street Journal that Wang intends to stand by a previous statement he made to "fight any and all efforts to place the crimes of Kumar and his management team at [his] feet." A representative for Ranieri and D'Amato also dismissed the allegations to the paper.